The primary objective of buying term insurance is to financially secure the future of your loved ones in your absence. The policy provides a lump sum amount to your dependents after your death. The amount is tax-free and can be used by your family as and when needed.
Now, you must have purchased term insurance at an early stage in life or are still planning to buy the policy. What’s important is to understand that you need to review your term insurance plan at least once a year. As you grow older, your responsibilities and priorities change. Therefore, reviewing your policy will ensure that you have adequate financial protection at all life stages.
Below we enlisted a few reasons why you should review your term insurance plan. Take a look!
- Increase in responsibilities.
At the time you purchased the term insurance plan, you might be single or newly married. Going ahead, your responsibilities are going to increase. You may decide to have children, and your financial needs are bound to change over time. Therefore, as and when your dependents increase, you will have to consider making necessary changes to your term insurance coverage. That way, everyone’s financial future is secure, even after your death.
- Change in financial liabilities.
Financial goals evolve as you grow old. Moreover, yours and your family’s financial need will increase going ahead. Besides, you might also have certain financial liabilities to repay. Considering all this, the term insurance coverage chosen at the start of the policy may not be sufficient.
In case something happens to you in the future, the amount received as the death benefit should be able to cover your family’s financial requirements and repay any pending liabilities. Therefore, reviewing your policy will help you consider this aspect and opt for a higher cover.
- Adverse reports regarding your insurer.
If you have been coming across many negative reviews about your insurer, maybe it is time for you to review your term insurance policy with this insurer. You can consider switching to a more reliable insurance provider who offers a wide range of features and benefits. Besides, there will be a difference in the premium amount based on your desired coverage and rider benefits. You can use the term insurance calculator to determine the cost of your term plan and make an informed decision.
- Changes in career and income.
As you grow in professional experience, your income grows simultaneously. Your salary at the start of the career and a few years down the line will be different. Based on these changes, yours and your family’s financial needs are bound to change too.
Therefore, it is essential to re-evaluate your term insurance requirements as you grow old. That way, if anything were to happen to you suddenly, your dependents will be able to continue leading the standard of living in your absence.
- Tax Benefits
As you know, term insurance provides several tax benefits as well. The premiums paid towards the policy can be claimed for tax deduction under Section 80C of the old income tax regime. Plus, the death benefit received by your family members is tax-free under Section 10(10D) of the Income Tax Act, 1961. Besides, if you have a term insurance plan with critical illness cover, you can claim additional deduction under Section 80D of the Income Tax Act.